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tv   Fast Money  CNBC  September 8, 2015 5:00pm-6:01pm EDT

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to rule i guess pre-emptively on giving it some tax approval status for its alibaba spinoff. not apparently given that ruling granted. let's up on "closing bell." thank you, sara and mike. we'll hand it over to you, at "fast money" to sort through all this right now. >> "fast money" starts right now. live from the nasdaq marketsite overlooking new york city's times square -- i'm melissa lee. our traders on the desk are tim seymour, brian kelly, karen finerman, and dan nathan. coming up apple shares are doing something they haven't done before heading into an apple event and it's got some am fans very nervous. plus one big bank taking it on the chin but warren buffett sees value in it. normally stocks would be our lead. we did have a nice market rally. but we've got some breaking news
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out on yahoo! this hour. josh lipton's got all the details. >> melissa, you take a look at yahoo! stock down so hard year to date and part of that was this confusion of whether yahoo! would have to pay taxes on this proposed spinoff of its stake in alibaba. remember that's a 15% stake worth about $25 billion. the irs, it sounds like now, has indicated it's not going to issue a ruling on these plans. that's the headlines dropping here. not clear exactly what that means for yahoo! going forward, but yahoo! does say listen, they're going to continue to work on this spinoff plan. we'll keep you posted, melissa. with these headlines and get back to you soon as possible. back to you. >> keep us posted. josh lipton from san francisco with this news on yahoo!. yahoo! at one-run point during the after hours session had been down by almost 5%. you guys might have gone to the beach on friday afternoon but here on "fast money" we noticed the filing, the chief accounting officer res yooinds in a filing
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after the close the friday before a three-day weekend and then we get this news dropped today on shares of yahoo!. tim. >> look, obviously concerning because a lot of people had imputed a tremendous amount of value in the yahoo! shares and some of the parts based upon a tax-free spinoff. i don't think that's really in the price. and i think in fact if you look at where baba is and so baba's now -- baba at 65 bucks, 38% tax implied value there, i think yahoo! shares, the sum of the parts are around 42, 43 bucks. the whole thing here is if you thought they were getting the tax-free spinoff that implied kind of your best case scenario in yahoo! and not one i think the street is largely doing. the step-down of the accountant, that is troubling obviously in terms of the timing of that event at a time when it almost seems like you're trying to slip it through the radar screen when nobody is watching. and frankly i don't have an answer to that. but baba's share price is yahoo!'s biggest problem right now. >> remember what happened last
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time when we had some kind of rumblings that perhaps yahoo! wasn't going to have the spinoff. everybody ran into alibaba as way a way to play alibaba. all these people playing yahoo! as a proxy for alibaba. i agree with tim. the chief accounting officer on a friday night before a long weekend stepping down, i have no idea what happened. but that is just a very strange thing -- >> you piece things together -- >> where there's smoke there's fire. >> and i disagree with tim. i think there is a lot of imputed value still for this tax-free spin. we're talking about a few billion dollars possibly but you're also talking about an asset that they've owned, they've sold back to the company. yahoo! has sold back to alibaba in the past. and they've watched the stock now decline 40% over the course of this year. at any point they could have been managing this risk. really we've known all along that yahoo!'s quarter has been trading negative to its holdings in asia. so the question is why you would own yahoo! is are they going to fix the core and what are they
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going to use the cash for? that cash now is going to be much less to -- who knows where alibaba's going. you saw how that stock traded today and they have over 1 billion shares coming off lockup in the next couple weeks. >> you know, i think there's still some in the trade thinking that they were going to get a positive ruling and that they were able to monetize the stakes. i think there would be a fair amount of pressure on it. some people might be concerned. >> that is the implication for spinoff. >> that first report came out, when was it? like in march or april, whenever that was. the stock would have gone down. again in the after hours session the stock wouldn't be down as much as it is. >> you can't argue that yahoo! share price isn't affected by momentum and sentiment around a tax-free spinoff. there's no question about that. but again, if you look at the alibaba share price, which is a
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big problem here, and so you know, my valuation for yahoo! yesterday is very different today because alibaba had terrible sales growth numbers for the second quarter, or at least guidance. this is a case where a 38% tax-free, or tax event on the share is something that to me if you have $80 price in alibaba this stake alone right now is worth about 36 bucks. >> what does this do to marissa mayer at this point? >> it's more pressure for sure. although i don't think it's her fault they didn't get the ruling they were hoping for. maybe it's the accounting officer's fault. maybe it's nobody's fault. but it also makes you wonder is there going to be pressure on alibaba because of the -- i don't know if they need to sell their shares, they want to sell their shares. >> there's been a lot of people who have been very, very critical about the job she's done. if she did not have this alibaba stake over the last few years, the core business has not been good. you saw the competitor aol was taken out by verizon. i don't think anybody's interested in taking out yahoo! for their core.
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there were so many scenarios that have been talked about over the last few years. but i think you have to give her a very poor grade on the core with a very difficult situation. but this doesn't make it any better. and if there were some shenanigans. if they didn't do a good job of articulating this -- >> and i guess the question is in 12 months is marissa mayer still going to be on the job? does this put the pressure on her and increased pressure on the board to actually raise them -- >> listen, you can only trade at a negative valuation for your core business for so long before the person who's actually sitting in the driver's seat has to take some responsibility for that. right? so if they have the spinoff, i don't know if this will be the straw that broke the camel's back. i don't think this is the reason why you get rid of marissa mayer. i think there's other reasons why there would be pressure on her. >> we've got more breaking news out of united airlines. let's get to phil lebeau with the latest in chicago. phil. >> melissa, lots of shaking up going on in the executive suites at united airlines. let's start off with the ceo and chairman, jeff smisek. he's out. as are two of his lieutenants,
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neni foxhall. mark anderson was senior vp of corporate and government affairs p they have both stepped down as well. essentially, this all boils down to what's been going on with a federal investigation involving united airlines and the former chairman of the new york new jersey port authority. don't want to get too deep in the weeds here but let's go back to 2011 when united was extending or in discussions to extend its lease at newark, which is one of its hubs. shortly after those discussions were taking place united added daily service -- i shouldn't say daily service. added service between newark and columbia, south carolina which was near the home or a second home of the chairman of the port authority. and for some time there has been an investigation into why united added this service. was this a quid pro quo in terms of hey, help us out on extending the lease, in exchange we'll add
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service from newark to columbia. that's what the investigation is looking into. by the way, united canceled that service three days after the chairman of the port authority resigned in 2014 because of the bridge scandal going on in new jersey. so that's at the heart of this shake-up at united airlines. there's going to be a conference call in about 25 minutes. oscar munoz, who was on the united board, is the new ceo of united airlines. this is an analyst call. we will not be able to ask any questions. but we will get some perspective from oscar munoz and perhaps other executives at united airlines about, a, where they stand right now, what they're going to be doing and where this investigation stands, this federal investigation stands into whether or not there was some type of quid pro quo between united and the former head of the port authority in new york and new jersey. but again, jeff smisek, ceo of united airlines, he's out along with two top lieutenants. guys, back to you. >> phil, had it been expected that jeff smisek would have a much longer tenure?
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>> i don't know if it was expected. there were certainly a number of people who were not happy with his tenure at united airlines. clearly when you look at how united has performed operationally versus delta and american, it's really -- it's two comparable competitors there and you can even compare them with southwest airlines. they've lagged. they have lagged in terms of operational performance. and yet their merger between united and continental, it went through before the american-u.s. airways merger went through. and a number of people have said for some time what's the problem at united? why are there so many problems integrating these two airlines? and they pointed the finger squarely at jeff smisek. well, now jeff smisek's not in charge. it will be interesting to see what oscar munoz and his leaders do in terms of increasing that integration, making this airline finally catch up with american and delta in terms of operational metrics. >> phil, keep us posted again. united's analyst call happens in
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just about 20 minutes' time. it sounds like this is sort of the straw that broke the camel's back in terms of his performance at the company. >> i think so. i think there's two things going on after hours. down because of uncertainty. you never love investigation, top people being fired. but then it sounds like there's a positive in there as well for maybe new blood, mr. munoz can turn it around. >> if this guy is new blood. he is an internal canned. >> i think the more important point, uncertainty is obviously a huge one here but they've obviously put someone who was on the board right into place here. whether they have new management soon, who knows? but i guess the underperformance of united is really important. when you think about how far -- united's more than 20% off its 52-week highs. you look at delta it's about 7%, 8%. so there's other things going on here. and i think that some of these guys on the desk who've been long other airlines, they've preferred delta over united. >> and that would be me. i'm not long delta right now. i think it's a case where if you look at the up side in these companies, ual has certainly a lot more inherent value and
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that's why for the reasons we're talking about in terms of the efficiency, the international markets i think for these guys are big. the transpacific routes, the competition from chinese carriers, i think these are things that are hanging over the company at a time when the entire sector i think has had a great rally back. in fact, i think this is kind of an opportunity to be fading the airlines trade. i think around 48, 49 on delta -- >> pretty decently. >> you've had a tremendous run. and i think all the best news on oil pricesize in the stock as well. >> for more on united airlines let's bring in jeff zonefeld, the senior associate dean at yale school of management. jeff, it's always great to speak with you. based on what we know, grade the board and the decision to have jeff smisek step down. >> i give them a lot of credit. this is a very governance-savvy board. it's got people like walter isaacson, who was the ceo of cnn and managing editor at time inc. and of course the great biographer of steve jobs and head of the aspen institute. very savvy guy. bill nooti as the ceo of ncr.
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i think they moved swiftly on this. very much to their credit. i salute them for this. something unconventional which i know that phil alluded to and i'm so glad that phil mentioned this, is that you have this guy oscar munoz, who as chief operating officer of csx was able to slide right in off the board. they didn't even create it apparently as an interim position, which meant that the board must have had some misgivings for a while to close off this situation in the transaction of both companies at csx and also at united airlines. so a lot of times you see where there's growing discontent with a ceo, i don't know, just thinking of a bp to radio shack at times when there's some catalytic event. it gives the board an excuse to do something they were of a mind to do anyway. >> and karen makes the point that if people were unhappy with the ceo the silver lining is that there's a new guy in town now and things could actually turn around. at the same time did the board
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miss an opportunity by not saying we're going to have an interim ceo and we're going to do a ceo search because we want to find the best guy out there? >> i don't see the reason for -- i agree with you. i don't see the reason is it had to go into panic mode and install somebody. although munoz is -- >> jeff, i'm sorry, i've got to interrupt. we've got some breaking news. back to phil lebeau. >> melissa, i now have a letter that oscar munoz, the new ceo of united airlines, has sent out to employees at united. doesn't go into a whole lot of details regarding the resignations of jeff smisek and two of his top lieutenants. but what is interesting here, and i know jeff can probably talk about this a little bit, he immediately gets to the question of what will he do as ceo and one thing he writes in this letter is he plans to extensively travel on the united airplanes within the system to see how the airline can run better. he writes, "how can we operate better? how can we better serve our customers? what support do you need to deliver that? you'll be seeing me frequently.
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i intend to regularly travel the system to hear about our operations directly from you and you can hold me accountable for that." just one quote from oscar munoz in a letter he has just sent to employees at united airlines. again, he'll be on a conference call that we're going to be jumping on in about 15 minutes. melissa, back to you. >> phil lebeau, thanks so much. want to go back to jeff sonnenfeld of yale. jeff, i think you heard what phil said in terms of oscar munoz, the new ceo of united saying what he's going to do. he's going to try to experience the network to see how he can improve it. >> well, you know, i think that's very interesting. the question that you had left just as phil came in with this added insight, is whether or not the board should have used this as an opportunity to see who's best available out there and benchmark munoz or others against him. phil presents the other side, is here you have something which has been an unstable, disappointing merger, the continental merger has not lived up to its others as the rest of your team has pointed out. but on top of that it's the public trust and public safety
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issues. airlines are not like any other business, and just to have the uncertainty there, when leo mullen was removed at delta, this is now three ceos back, they put in jerry grinstein from the board. grinstein wouldn't take it as an interim role. he was quite a bit older but he stayed on for quite a while. he was a lawyer, by the way, just like smisek was a lawyer. but he transitioned into the role and he wasn't going tyke it on an interim basis and that turned out to be pretty good. looks like munoz had a whole plan ready to go here. smisek, it's interesting as you go back. he was a long-time attorney at the scandalized vincent and elkins, the old enron law firm, and then transitions from that into continental airlines where he was general counsel. but he's been a lawyer most of his life, not an operating executive. munoz has been an operator. so it's very encouragi all the service failure and customer grievance issues we've been hearing about with >> jeff, we're going to leave it there. thanks so much for phoning in. we do appreciate it, as always. jeff zonefeld of the yale school
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of management. i'm going to pose a question to you guys. oscar munoz in that letter, he did say some encourage things. at the same time, should the board have done a full search? >> it sounds to me this is very consistent with what we just said, is this guy -- the board has known that there was a change coming for a long time. munoz, by the way, heavy background with at&t, coke, pepsi, some of the most well-run companies in the world arguably, certainly with high, high governance standards. this guy sounds like he's a no-brainer, especially if he was already in that board ready to roll. >> we don't know that they haven't. >> that's true. they could have done it already. >> they could have done it and this would have been the opportunity for them to -- any good company should have some -- >> a backup plan. >> yeah. so it is possible they think he's the right candidate. >> ual stock still at after hours session lows. that conference call gets under way in 14 minutes' time. we'll continue to bring you the raft on these big breaking news developments out of united as well as yahoo! as we get some more details.
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still ahead, though, netflix shares getting hit after verizon and the nfl make a major push into streaming. one top analyst says the street's got it all wrong. he will be here to explain what everyone is missing. and apple shares are doing something they have never done heading into an iphone event. we'll tell you what that is when "fast money" returns.
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welcome back to "fast money." we're following two breaking stories here in the after-hours session. united airlines lower on news that ceo jeff smisek is out to be replaced by oscar munoz. united will hold a conference call at 5:30 p.m. eastern time with more details. we will bring you the latest as we get it. meantime, shares of yahoo! also moving lower on news the irs has rejected the company's tax-free spinoff of its alibaba stake. aaron kessler, raymond james, covers the stock. he's with us now on the "fast" line. aaron, great to have you with us. >> great. thanks for having me. >> technically, the irs has rejected the request. what exactly does that mean? >> yeah, they rejected the request that yahoo! has submitted. yahoo! is looking for a view on the active trader business clause to see if that complied with the current irs code. basically, the irs said we're not granting a ruling on that. that was due on september 2nd, or yahoo! withdrew the request on september 2nd.
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but really the irs has not made an official ruling on the situation yet. so really no firm decision yet that we've seen from the irs and yahoo!'s counsel continues to believe the deal complies with current irs code. >> so the bottom line here, aaron, is we don't really know. the spinoff could end up being tax-free or it may not. >> it's unchanged. july 31st the irs did announce it was setting the new potential guidance with respect to the active trader business clause and so it is apparent the irs may be taking a little longer to study this than investors maybe thought before and i think that is worrying investors today. >> it's karen. if you were yahoo! what would you do here? do you try to go forward with your plan anyway or do you need more clarity? >> yeah, i think yahoo! needs more clarity. there probably is some other options that yahoo! could seek that are more shareholder-friendly from the
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alibaba asset position. if they do not get a tax-free ruling yahoo! may want to go back to the drawing board and see what other alternatives they may have. >> aaron, can you quantify, they own 384 million shares. with know what the stock price sf alibaba here. can you qualify what a tax-free spin means to existing yahoo! shareholders? what are we talking about in billions of dollars here? because if we're trying to figure out how to handicap this. >> i would say as of right now yahoo! is implying very little in terms of the price of the tax-free spin. basically, at a price where alibaba is today around $60 per share even assuming a full tax and our price target, the delta's about $9 per share on a full tax versus a no tax situation. pretty meaningful. yahoo!'s stock, 30, that would imply close to $40 if they got a zero tax on alibaba's stake. >> what's your price target, aaron? does that factor in the tax-free spinoff? >> yeah so, right now our price
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target is $45 and that does assume about a 60% chance that a tax-free spin goes through. >> aaron, thanks for phoning in. appreciate it. aaron kessler joining us on yahoo!. $45 price target. >> 45. >> exactly. >> 29 bucks. again, what is today's afterhours move which is another 3 1/2% in the stock? it's easy to vlify or just say the company hasn't done well in its core business. i won't vilify anybody. but if you look at the mavens, the mobile, the video, the native, the social, these are things people see some progress in. i see some progress in. you get anything out of that and the stock will shoot a lot higher. >> i've owned yahoo! before on basically the same premise. they have to do one thing right. things are so bad right now that it wouldn't take much to get this stock going. i don't know anything about the irs tax spinoff, but at 30 bucks a share and a negative, there is some value to the core business at yahoo!. it's not negative.
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>> the big problem is baba. taxed or not taxed this stock has gone from 115 bucks down to 62. this is the big issue with yahoo!'s valuation. >> but not it's not just alibaba. it's also yahoo! japan. we know the nikkei is down 20. yahoo! japan is down 20%. a billion or so value involved in yahoo! japan. if we're really on the precipice of a rerating of a lot of these stocks globally, they're going to own -- they end up owning a lot of this stuff in china and japan and here and it's not worth anything here. it may get a lot cheaper over there. >> cnbc's breaking coverage of the two huge stories in the post-market continues after the break. you're watching cnbc, first in business worldwide. in the meantime here's what else is coming up on "fast." >> apple's stock is doinging? it's never done heading into an iphone announcement. and it could spell trouble for america's favorite stock. >> say it ain't so. >> plus, one beaten bank stock is down 10% in just a month.
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but warren buffett still loves it. ♪ never, never gonna give you up ♪ >> we'll tell you what it is when "fast money" returns.
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advertisers. if better pages encourage a fraction to buy an ad that could be meaningful to the company's bottom line. as consumers and companies shift more to mobile facebook wants to be interface for the mobile web. instead of yelp or the mobile browser everything you do is within facebook's family of anz. >> thanks so much. facebook, since its most recent highs at the end of july facebook is still down 10%. >> on valuation it's not a company you can see oh, it's so defensive in this market. but in the global growth scare that we're in which i think is ill-advised facebook is a very defensive stock. but trading the stock, 82, 88, 94 those are your levels on the stock and 82's where we got down to. i think the stock trades in that range for the next six weeks. >> i think what tim just said is there is no valuation support for a company that has a $250
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billion market cap. i look at the other way from tim. i don't think it's defensive. i think it's very dangerous here. i think it's still up 15% on the year. i do not think it got whacked hard enough over the last couple weeks here. and it's very crowded. there's a sentiment bubble in facebook. we've seen them take down stocks like disney and apple and others and if we're going to make new lows in the s&p over the next -- >> that's buried in your whole thesis right there is the market's going lower. >> i know. and you guys have been just buying every dip and you've been geniuses the last few years but i think -- >> who's been buying every dip? i hear what you're saying. you're saying it's not defensive. that's a pretty good thing counter to my saying i think it's defensive. i don't agree. >> karen. >> i appreciate being called a genius. thank you. >> you are a genius. >> you say that to all the the girls. but in terms of facebook is doing, you're in google. could this be trouble? >> you know, i love google.
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i think google's valuation is a pretty good mode. but i really do believe facebook is headed 200. i thought it would have been sooner than now because of the downturn we've had but i can't support on valuation but i just think it's a darling. >> okay. still ahead, all over two big stories in the after-hours session over yahoo! and united. those stories sending both those stocks lower. the latest from united's conference call. ceo jeff smisek stepping down. oscar munoz from the board named the new ceo. meantime netflix is facing the heat as more and more companies jump into the streaming business but one analyst says the more the merier. he xwlnz explains why it could good thing for the stock. plus we'll tell you the one sector traders say is about to set up for a major rally. that and much more "fast" still ahead.
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genuiunited falling after a announcement jeff smisek is leaving. united hosting a conference call about the change as well as the
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federal investigation. our own phil lebeau is listening in. he'll bring us the headlines as they come. meantime apple is doing something it has never done before. the stock has never been down ahead of an iphone launch but it is right now. is that a bad sign for the tech giant? plus warren buffett speaking out about bank of america's latest plan for the c suite but one of ow traders says the oracle is wrong. that person will explain later this hour. but first with all the breaking news we have not yet talked about stocks and we had a massive rally. the dow ending the day up nearly 400 points. all the major indices rallying nearly 2%. technology, financials, they were really the stars of the show in today's session. >> the question is what was the driving force, the catalyst? it was almost relief. you almost argued thursday afternoon we were starting to see the long weekend sell-off and people were taking any risk they could possibly take off. we got some bad numbers out of china but on some levels they weren't as bad as expected. maybe that means more stimulus. then we got some really good data out of europe. and if you look at germany's
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imports and export numbers it tells you the world's largest export economy tells you things are okay. copper prices started to rally. you saw the glencore news which means to me it was i sign for a lot of miners. that as another big key for the market. a lot of good stuff today. >> you had multiple cat liszt tod catalysts today. glen co. was the biggest one. they led us lower for six months. now glencore makes a panicked move at the bottom potentially of commodities. that could have put some kind of floor in commodities. that being said, i do not think u.s. equities and generally equities globally are out of the woods yet. we still have a long way to go of this unwind. >> you were off for a week. you come back. do you feel better seeing this 400-point rally on the dow? >> not really. and i don't love coming in off of a high. we were up maybe 30 handles going in, 26 handles. i like seeing rebounds off down. but i agree with tim. friday's action was people just not wanting to be long for the
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weekend. >> can i ask this question to dan? you're probably fading this rally in today's market. >> not yet. it was nothing short of -- i mean, it was an amazing rally and it was very broad. but here's the thing. to me i actually fundamentally disagree. when you're talking about the sparks here, you know, china, that late-day like rally of 4 1/2%? that's pathetic. that really is pathetic. i think the rally has more to do with inner shah. we're going into this fed meeting in a couple weeks. and i'll tell you this. if you thought august 24th was scary when people were panic selling, the reason to sell, the market's been going up for five years. today this is more pathetic that you're jumping back in because your fear of what do you call it? fomo? >> fear of missing out. >> that's pathetic. >> this sounds like a perfect opportunity for you to short. >> so i said this last week. and i'll tell you. nasdaq composite 5,000 i think you lay into them. that's going to be the level of the century. i think 2050 if we get there, i know we're 1970 in the s&p. that's a great level. the prior breakdown levels that's where you lay shorts out. you take profits between here
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and there. >> it sounds like you're really convicted that this is the most pathetic rally in the world if you're not willing to -- >> it's just one day, mel. let's be honest. it's a one-day rally. and if they're down 1% tomorrow what does that tell you? >> well, that's the point. we barely retraced. we haven't retraced anything of what we lost over the last week. so while it looks like a big rally, 400 points, it's really range trading, believe it or not. a 400-point range trading here. that's the issue here. and i agree with you. you lay them out at 2040, 2050 on the s&p and you watch japan as well. >> i thought it was very interesting. then you had some stocks that really can't get out of their own way. netflix, gopro, high momentum, high multiple stocks. it's nice to see that they continue to get sold. and that's a core view of mine. but if you look at the technicals, closing above 1960 i think was constructive for this market. >> let's talk about netflix. one name that didn't fare so well. netflix shares down by almost 4% amid new developments in the streaming wars p. it's now closed below its flash
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crash lows of two weeks ago. verizon and the national football league both out with new announcements. verizon launching a new service called go 90 which features content from espn, comedy central and discovery among others. in the world of sports nfl announcing a new $99 service called game pass which allows cord cutters to watch preseason games, listen to regular season games and stream games after they've aired. so which company stands to win and lose in the latest battle in the streaming wars? rich greenfield is technology and media analyst at btig. great to have you with us. >> thanks for having me, melissa. >> i want to get at this netflix underperformance. we highlighted the underperformance from the flash crash low but actually if you take a look at its most recent high which was the beginning of august it's actually down by more than 25% to now. so what's going on here? >> it's also up 100% year to date. it's had a pretty tremendous run over the course of the last, you know, last year even. i think the real thing to focus in on is that there's a lot of concern among investors that all
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of the different players, two of which you mentioned in verizon and nfl, i think we've had increasing fears about amazon who's getting more aggressive, even people talking about will apple get into the original programming content world and compete. a lot of fears of competition. the flip side of all of this competition is that what does it say about the consumer? consumers love to stream. they love on demand streaming. they love it without commercials. they love it across any device. who's the biggest player, the gs in that sfwhiz netflix. anything that shakes from the multichannel bundle where you spend $80 a month and lets you free up those dollars, that's going to be good for netflix and good for their subscriber growth, and i think that's what people are going to refocus in on once all of the kind of near-term speculation around all of these new services launching translates into what they see in terms of netflix performance on a subscriber basis over the course of the next several quarters. >> i understand, you know, in theory the notion about competition. but shouldn't we only worry about competition if they're
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going to drop netflix in favor of the other options? i mean, if you have an nfl game pass you're not dropping netflix or some of these other services. you might not necessarily drop netflix. >> it's like worrying about hbo because showtime has "homeland" and has a breakout hit in "homeland." you know, the reality is more people being in the world of streaming video without ads in a push-button, click, watch anywhere basis, that's great for netflix. i just think there's a lot of fear around competition, maybe a little bit of selling winners that have done really well, but the fundamental netflix story is gaining strength and i think that whole global rollout expansion, we saw them launch in japan last week. didn't make a lots of notice in the market but they launched japan. japan ace top ten global market. there's an article in the "korean times" that came out overnight saying they're going to be launching south korea, another top ten global broadband market. in q12016. sorry, skran 20january 2016.
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i think there's a little near-term fear and misunderstanding of what all the competition means for netflix the stock. >> rich greenfield, btig. i think the question at this point, when i mentioned the down 25% from its august highs, is is there a rerating going on in the stock where those highs won't be reached in the near future because we are in a different world right now where market volatility reigns and you just don't debt up stocks that have gone up that much already. >> i think the street marked them up massively after these great second quarter numbers. you got to a place where it led a lot of people into the momentum peak in the stock. and everything rich said is absolutely dead on. these guys are so far ahead of everyone else. even if there is competition. but at what valuation? i mean, it gets down to a place where i think they're doing great things but it's not worth the money they're paying for it because it can't grow at this rate. >> yes, they're launching japan and south korea. but those are things that we already knew. we knew there was going to be this global expansion. and that's what people were paying that premium multiple for. so in an environment like this
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when people are shooting first and asking questions second, competition begins to matter in this. ultimately, i don't care what business it is. if you have a lot of competition in the space, it matters. >> dan. >> i think it's going to be a very crowded space, whether you're a content delivery mechanism, which they are, and they're also an original content generator. so all these things, when you talk about the nfl, that's just content. right? but to me i think they've benefited a great deal from the awareness of the consumer that this cord cutting and over the top, this is all going to happen. i think at some point in the next year or so consumers are going to come to the realization if they want this a la carte stuff it's going to be a lot more than what they are paying comcast or time warner before. i actually believe this is going to be a massive shadow war between those guys, the cable companies, embedded ones and all these new media ones and the content guys are going to fall into line. i do believe at a $40 billion market cap there is a world where netflix can exist. but i just don't think that the valuation doesn't sourpt itself. i think it's going to look a lot
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different at some point in the not too distant future but i don't believe they're the massive beneficiary, the only beneficiary of this trend. >> still ahead, apple ceo tim cook is getting ready to hit the stage tomorrow but there's one major sign the company could be in trouble. we'll explain after the break. plus financial stocks rallying and traders are betting there's more green ahead. details ahead. much more "fast money" straight ahead. care of my heart. that's why i take meta. meta is clinically proven to help lower cholesterol. try meta today. and for a tasty heart healthy snack, try a meta health bar.
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welcome back to "fast money." i'm morgan brennan with this market alert. shares of tetraphase pharmaceuticals plunging 80% in after hours tradinging p. the biopharmaceutical company saying its experimental super bug fighting antibiotic failed to meet its goal in a late stage study. it showed the drug was not better than johnson & johnson's competing antibiotic. the company had expected to apply for regulatory proofl bit end of this year, and just to put this drop in perspective the stock closed at $44.78 a share this afternoon. it's now trading around nine bucks a share in the after hours. melissa? >> thank you, morgan brennan. and the stock wasn't a small one before the drop. it was a $1.6 billion company at the close. ibb, though, the biotech etf, really a strong part of the market in today's session,
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getting help from a couple of upgrades on amgen and regeneron. who's in the biotech trade and thinks the worst is behind it? >> if you're of the view that -- my view is the market is very choppy vol for the next six weeks. i think ibb is still in the throes of that. >> apple set to make a number of new product announcements at tomorrow's event and weil fall product launches are standard for apple shares of apple are doing something they have never done before leading into a launch. paul hickey is bespoke investment group's co-founder. paul joins us here. paul, what is it they have never done prior to a launch? >> the stock has never been down in the three months leading up to an iphone refresh since the iphone was first introduced. who needs kensho when you have me in three months before it's down, 12%, 13% right now, one month before the stock is -- has typically been up again. not as much. it's never been down this much a month before. what we're thinking is going into this event here the bar is set very low for the stock right
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now. no one really has a lot good to say about apple right now. in the beginning of the year there was tons of positive sentiment on the apple watch which has turned out to be so far not the success many anticipated. tomorrow's not about the apple watch. it's about the iphone, apple tv, larger ipad. i think this sentiment is a little skewed to the negative side here and we could see an up side surprise. the typical pattern of buying the rumor, selling the news on apple product launches could reverse itself. >> but again, when you take a look at the performance leading up you're only looking at iphone launches. as you mentioned, tomorrow's event is really not about the iphone. >> tomorrow -- with apple any product launch is the iphone. the iphone is the bulk of their sales. they're going to refresh the 6 and 6 plus. so even in refresh cycles for the iphone the stock has been up every time in the three months leading up. again, it's down 12%, 13%. >> what percent of those are yet to upgrade who already have an iphone?
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>> according to aur surveys we do for bespoke market intelligence about 45% of current iphone owners have an iphone that is now three years old or more. so -- >> that would be me. >> those screens are getting very small right now, small relatively speaking and when your phone's three years old there's certainly time to upgrade here and people, even if they don't go for the newest refresh they'll go for the 6 and 6 plus original ones which are still high margin phones. paul hickey of bespoke. does that mean apple's stock is springloaded? >> it's not springloaded. but one of the things i've been saying is i think the expectations are low. i would agree that that tells you all you need to know. i do think also apple needs to come up with something other than the iphone 6 refresh. but i don't think they need to do it in the next four quarters and i think that's where the stock's trading. >> with the way the market's trading in this giant range it wouldn't surprise me to see apple get up to its 200-day moving average, that would be
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about 120. that's a decent trade. i think there's a trade here in apple. i think until you see a real new product, not just promises of a tv coming out and maybe a bigger screen or a sharper screen, it's going to be hard to have apple blast to new highs. >> karen? >> i'm hanging on to it. i like historically it's been i good time to own it, going into a new phone launch. but i'll hang on to it. it's not a crazy price here. >> and it's a holiday season coming up. >> tomorrow's doeg to be about the ecosystem. and i think that should serve it well between now and the end of the year. i think as we get into 2016 and we start hearing iphone 7 leaks and it's not that exciting, i think that's the real risk to this story. but a 640 billion market cap with $200 billion in cash and expected $230 billion in sales, the cheaper it goes you're going to find buyers toward 100. you know, that simple. >> still ahead, shares of united airlines still down after hours on news that ceo jeff smisek is out. the company is the focus of a federal investigation. there's a conference call going on right now. the stock sits down a little bit
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more than 1%. phil lebeau is on that conference call. he'll give us the very latest right after this break. i was going to the library to do my homework. it was a little bit of a walk to get to the bus stop. i had to wait in line to use the computer. took a lot of juggling to keep it all together.
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welcome back to "fast money." i'm phil lebeau. i'm listening in on the conference call being held by united airlines executives and specifically by new ceo oscar munoz, who moves up from the board of directors to become the new ceo of united. three important things that have been discussed in the last 15 minutes on this conference call. first of all, they've been asked a number of times by analysts whether or not there's any further color that they can share regarding the ongoing investigation, a federal investigation into what happened between united airlines and the former head of the new york-new jersey port authority regarding whether or not there was an agreement to extend service to columbia, south carolina in exchange for the united lease at newark airport. they would not provide any further color there. they do, however, say they do not expect any financial impact because of the investigation and that the planned slot swap between united and delta, that involves newark and jfk, they
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expect that to go through as previously announced. and finally, oscar munoz has been asked a number of times about what he's going to be focusing on now that he's running the airline. here he is just a few minutes ago talking about his focus being on improving united's financials and operational performance. >> we intend to achieve these goals while maintaining cost discipline, expanding our earnings and of course allocating capital to share owners. i truly believe united has tremendous potential and i look forward to leading this team to become the top-performing airline. >> that's oscar munoz, the new united ceo. melissa, we're going to hop back on the call. we'll have more overnight and tomorrow morning. >> thanks so much, phil. again, united shares off session lows. we've got the final trade straight ahead. did we just see what's known as a successful retest of the lows? or is this the calm before the next storm? we've seen this pattern occur time and again with bottoms in the stock market.
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big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.
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welcome back to "fast money." we're getting some headlines from dow jones that gm is delaying the national launch of its next generation chevrolet volt. gm will offer the 2016 volt in a handful of states later this year. also that it will pull production of the 2017 volt to offer more features. melissa, back to you. >> thanks so much, morgan brennan.
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we can see gm shares reacting very slightly but once again the big stories of the evening united airlines and yahoo! fwriethding lower in the after-hours session. they will be big stories tomorrow morning. that does it for us. thanks so much for watching. i'm melissa my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job isn't just to entertain but to educate and teach you. call me at 1-800-743-cnbc. or tweet me @jimcramer. anybody who has a high school diploma has taken a course in chemistry. a course in geometry,

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